Music Sharing Program Grokster Goes Offline After Suit Settlement

By Jeff LeedsTHE NEW YORK TIMES

LOS ANGELES

Grokster, a developer of file-swapping software used to trade copyrighted music and movie files, said Monday that it would halt distribution of the software and cut off support for its associated network as part of a landmark settlement with the recording industry and Hollywood studios.

The agreement comes four months after the Supreme Court unanimously ruled that Grokster could be held liable for copyright infringement by users of its software, a decision that delivered a decisive victory to entertainment companies, particularly music labels, which have blamed widespread digital piracy for a worldwide slump in sales.

The court decision sent the case back to a trial court, but the settlement — submitted to a federal judge in Los Angeles on Monday — averts further legal wrangling for Grokster in the four-year-old lawsuit.

Grokster also agreed to pay up to $50 million in damages, though music executives say they do not expect to collect because the software company lacks the resources to pay.

The deal also includes an injunction that bars Grokster from directly or indirectly infringing the plaintiff’s copyrighted material.

While Grokster is disappearing in its original form, the underlying case that culminated in the Supreme Court showdown may continue. Grokster’s co-defendant in the case, Streamcast Networks, the promoter of a file-sharing network known as Morpheus, has indicated that it plans to keep battling the movie studios and record labels in court.

More broadly, the popularity of file-sharing networks shows little sign of waning in the wake of the settlement, or the earlier court decision. An estimated 9.2 million people are using various so-called peer-to-peer networks at any one time, according to the BigChampagne, a data service. Indeed, the figure has edged up from 8.8 million in June.

And it is a global problem. In Hong Kong on Monday, a man received three months in jail for using an Internet file-sharing system to make three Hollywood movies available for others to download for free.

“I don’t think, practically speaking, we’re expecting to see much of impact in the peer-to-peer landscape,” said Eric Garland, BigChampagne’s chief executive, based on the agreement Monday. “People moved on from tools like Grokster some time ago.”

The entertainment industry continues to scramble to keep pace, taking legal action against file-sharing networks in Australia and South Korea.

The campaign, spearheaded by the Recording Industry Association of America, has also taken aim at individual computer users. (The major labels have sued more than 15,000 people since the effort began two years ago.)

The recording industry has said its extensive legal campaign is intended to gradually deter the entrepreneurs who run many of the biggest file-sharing networks and the advertisers that support them, all while driving music fans to authorized services like Apple Computer’s iTunes, which sells individual songs for 99 cents each.